Wednesday, November 17, 2010

Global concerns about Ireland's fragile finances and the USA's sluggish economy have caused TD Canada Trust and the Royal Bank of Canada to both raise their fixed-term mortgage rates by one-quarter of a percentage point, effective this past Wednesday.

For both banks, five-year mortgages, popular among Canadian homeowners, will rise by 0.25% to 5.44% total. Not long ago they were slashing mortgage rates in an effort to be competitive. No longer.

With signs the housing market in Canada is about to rebound (and that the housing bubble isn't going to burst immediately) they also upped rates on three-year and four-year mortgages, again by 0.25%. One-year and two-year rates will go up by 0.15%.

Rates for mortgages that have six, seven, and 10 year terms will be unchanged.

Friday, November 5, 2010

Living in a condominium is like living in a small village, albeit you may not know the names of everyone. A condo has a board of directors made up of its residents much like a town council, and likewise it has rules, restrictions, bylaws and even fines for misbehavior such as loud, noisy parties at 4 AM on a Tuesday morning.

Heck, there might be a condo across the street that looks EXACTLY the same as your condo, but it may be a completely different community when it comes to the way it is governed and its rules.

It pays to keep these things in mind when finding the condo unit which is right for you.

1. Condo Parking, Pets and People

You might own your own parking spot or it might rented from the condominium, and this in turn will affect whether you can sell/rent out your parking space or if you can rent/buy another parking spot for a second car.

Many condos restrict or prohibit pets such as dogs and cats, and sometimes even restrict the quieter pets like spiders, goldfish, snakes, gerbils and (heaven forbid) beekeeping.

There may also be rules restricting how many people that can live in an unit or even just occupy it temporarily in the event of a party, barbecue on the balcony, have all your yoga friends over for a vegan lunch or whatever. There might even be rules restricting you from putting a satellite dish on the outside wall. Other restrictions include when you can play musical instruments, use the pool or the party room.

2. The Condo Reserve Fund

The condo board needs to keep track of how much money is in the reserve fund and how much is needed in order for them to pay for cleaning and maintenance of the lobby, hallways, elevators, furnace, roof and parking garage. They must always be maintained and repaired or else they are liable for lawsuits for failing to fulfill contracts with condo residents. Thus the condo needs a reserve fund for emergency repairs. Often the prices of utilities, security, landscaping and snow removal go up too, so expect inflation. If there is no reserve fund, be very wary of buying.

3. Condo Management and Professionalism

Most people on the condo board of directors lack any kind of business, legal or people skills needed to manage their building, let alone dog grooming business. They are on the board because they ran for the position and got voted in on popularity. Nothing to do with skill at all. However the are responsible for a budget that could be in the millions and must also deal with sometimes complex disputes between owners and the condo corporation. This requires a working understanding of the Provincial Condominium legislation that governs their condo. Even simple decisions such as when to turn on the air conditioning requires basic understanding of how it works and how the AC will affect unit owners in different ways, like whether they are on the south or north side of the building.

That’s why a condo needs a professional property manager. They know these things inside out and if they don't do them properly, then condo residents complain. If the condo you are buying doesn't have a property manager... then cross your fingers and hope you never run into an incompetent and belligerent elected-member of the condo board. It will be guaranteed to be headaches galore.

4. Insurance Deductible

Does your condo insurance policy have a $5,000 or $10,000 deductible? Make sure you speak to an insurance specialist about obtaining your own unit coverage to protect your belongings and any renovations made to your unit.

5. Were those renovations legal?

If any alterations to your condo were made you should check to make sure that they got the necessary approval via the condo board. Otherwise you might have to get it approved yourself, even though its after the fact, and this can be costly. You may end up paying for further inspections and certifications by plumbers, architects or engineers, things that should have been paid for by the previous owner.

6. Do the condo residents behave?

Call it schoolyard justice and bullying if you want to, but many condo residents don't play fair. They get into feuds about the stupidest little things and the next thing you know they're both running for condo president so they can try and kick the other person out of the building. Its ridiculous.

Before you buy its recommended you knock on some doors and ask your would-be neighbours about the building and how happy they are about other neighbours. Remember to look at the minutes of the last annual meeting. Were there many items disputed? Be suspicious if they haven't had a meeting in over a year.

7. Status Certificate

This handy little document issued by each condo shows an up to date copy of the budget, the last annual meeting, whether there are arrears / expenses, special assessments and a Reserve Fund Study. Your purchase agreement MUST be conditional on you being satisfied with the contents of this very important document. Review the document carefully with your real estate salesperson and your lawyer.

Well, its now November 1st 2010. Five years and almost a month later. So I think its time we asked, how much did the prices go up???

Well, lets start by looking at crude oil prices - which in turn effects the prices of heating oil. Below in the chart you will see inflation adjusted prices on crude oil rose between 2005 (roughly $45) and 2010 (roughly $70) climbed approx. $25 per barrel, or about 56%.

The next chart shows the prices of furnace oil / heating oil for 2000 to 2010. It looks very similar because the prices are largely effected by the prices of crude oil. The biggest price rise was during 2008 (the Great Recession), and it continues to rise. Compared to 1999 prices the cost of furnace oil has doubled in the last 11 years.

This next chart show the price increases for Natural Gas... The chart points out specific spikes in costs due to the California Electricity Crisis, Severe Winter Weather (thanks to climate change), Hurricanes Katrina and Rita (again, climate change), the high oil price spikes in 2008 effecting the cost of natural gas too, and the economic slowdown that followed the bailout of banks and the real estate market collapse in the USA.

All told the prices for natural gas actually have dropped since 2005. But compared to 2000, prices have doubled in the last 10 years.

Monday, October 18, 2010

Today I posted an article on Product Reviews Canada about Looking for Homes in Georgetown. I probably should have posted it on HERE, but whatever, I am not writing it over again. So please go have a look at the article, especially if you're also considering buying a home in Georgetown (near Brampton) and then commuting to Toronto.

The housing development in Georgetown (Weavers Mill - Georgetown Homes) I am interested is in downtown Georgetown, very close to the Go station and shopping locations and also a stone's throw from Brampton. Very convenient.

And the prices of homes in Georgetown are SOOOO cheap compared to Toronto or even Brampton. A Weavers Mill townhome costs a mere $289,990 whereas in Brampton or Mississauga it would cost you $500,000 or more.

Any other locations outside of Toronto I wouldn't even consider, but I seem to have some romantic leanings towards Georgetown because of fond memories there.

I manage to find a copy of a rendering for Weavers Mill. The opening is on November 13th.

Facebook founder Mark Zuckerberg believes "Designing products around people will be universal...will not just be Facebook". He believes we are entering a new era of internet-based social activity wherein the "default is social" and things will be centered around people as opposed to things and objects.

In other words its not just a home you're buying, its a social atmosphere for people... including their virtual presences. Zuckerberg believes every industry will be effected by the social affect, including the car industry, the fashion industry, and the real estate industry.

Zuckerberg explains that when speaking face-to-face we use our knowledge about the person to assign value to what they're saying. Real estate advice from a friend has more value than advice from a stranger on the street, even if they're giving you the same advice.

Saturday, October 9, 2010

My career prospects and my hope of owning a home of my own someday improved dramatically over the last 3 days. On Wednesday I had a job interview and was hired the same day. I started working there Thursday.

I am feeling much more confident that it will only be a matter of time before I have a house and a mortgage of my own.

In other news I also have a new girlfriend and she is absolutely wonderful. I have high hopes that it will be a relationship that lasts a long time.

Overall its been one of the best weeks of my life. :D

UPDATE: I late quit that job a month later. And broke up with the girlfriend in question 6 months later. C'est la vie.

Thursday, October 7, 2010

Developers in Canada were still building at a rate of $5.7 billion in new building permits in August, but its down 9.2% since July according to Statistics Canada, which released the data today.

The decline was mostly due to lower demand in commercial, institutional and industrial buildings in August, which are down 22% since July. The decrease was worst in Ontario, British Columbia and Quebec.

Canada's residential sector meanwhile has seen 4 months of decline, buoyed in August by a 2% increase in residential permits.... mostly apartment buildings and condos in British Columbia and Ontario.

But building permits are still up by 11.4% compared with August of 2009.

Tuesday, October 5, 2010

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. Here are 10 things to consider when buying a home.

1. The housing market isn’t really a market

The housing market is not like the stock market. Even though housing analysts like to compare real estate returns to stock market returns, it is a very misleading comparison.

2. Real estate doesn't outpace the stock market

The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 7.5% a year after inflation in each of the last 25 years.

In contrast the average increase in the value of a Canadian home over the same period was 2.5% per year. (In other words the value of your home will be only slightly higher than the inflation rate.)

Yes, your home is an investment, but its also a way to SAVE money so you're not paying for rent. Don't expect to actually make money by buying and selling your home.

3. Don't gamble with your home

People who leverage their home to buy stocks deserve to lose their home by betting on the stock market. If you're putting all your eggs in one basket sooner or later you always lose the basket.

4. It’s NOT always a good time to buy

People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until 2002. Housing prices don't always keep going up. Bubbles can, will and MUST burst.

5. Location, Location, Location

Paying extra for a nice location downtown with a low crime rate is worth it. You save on mileage, lack of crime, lower insurance premiums, and older communities are more immune to market slips and slides because they maintain their value more.

6. Buy the cheapest house in the neighbourhood

Sounds like strange advice, doesn't it? The cheapest house in the neighbourhood is discounted and sold at a lower rate because it will likely be slated for renovations in the future. Its a good deal, your property taxes will be less, and after renovations you will be able to sell it a decade later for a tidy profit. The rise in local property values (especially in older neighbourhoods) means your home will rise with the community.

Or you may decide you love the neighbourhood and refuse to ever sell. Win-Win.

7. You don't need an agent, but it is a really good idea

Not everyone wants or needs professional advice from a realtor and they have the option of selling their home privately. But good luck doing that. A good realtor is a huge asset, allowing you to save time, stress and your home will sell for a ton of extra money which outweighs the commission on the house. Yes, you can Do-It-Yourself, but dollar-for-dollar its still more worthwhile to have a realtor do it for you.

8. Find a local agent

Hire an agent who knows they neighbourhood you are either selling or buying in. The fact that they know the neighbourhood really well is the BIGGEST advantage an agent has over selling privately. Results will vary depending on the agent so when interviewing agents ask lots of questions about the history of the neighbourhood, local schools, stores, gyms, etc. everything you can think of.

9. Renovating does not guarantee Extra Returns

Don't watch those moronic renovation TV shows that redo an entire home in a week, gut your home, cost a fortune and then presumably sell your home for a huge profit. Its unrealistic and doesn't happen in real life.

If you renovate anything the best thing to do is redo the kitchens and bathrooms. The value of kitchen/washroom renovations can boost the sale price by 75% to 100% AT BEST of what you spent on the renovations. Ie. If you spend $10,000 renovating the kitchen, the best you can hope for is an extra $17,500 to $20,000 boost in your home's value.

And then there is the Diderot Effect. Denis Diderot was a French philosopher circa 1772 who made the mistake of buying a fancy new dressing gown. Suddenly everything else didn't match and he ended up having to buy a new closet, new wardrobe, new sheets, new bed, new desk, new furniture and basically refurnished his entire home just so it would match his dressing gown.

Renovations frequently go overboard on spending because of the Diderot Effect. You could very easily spend thousands more than expected on things potential homebuyers don't even want.

10. A good ol' fashioned coat of paint

Get a second pair of eyes before you decide to sell your home and ask them to tell it as it is. You may be noticing the coffee stains, the holes in the plaster, the paint which looks dull and faded... but those are just superficial qualities that can easily be fixed or replaced. You probably don't need to sell your home if its just minor details that just need a proverbial coat of paint.

11. Stop trying to time the market

Selling your home during a market peak and then renting a place in the meantime while waiting for a market crash is silly.

Sure, in theory you could make/save a bundle by buying a home at a lesser value when the market crashes... but what if it only crashes 5 to 10% and it wasn't worth it? What if the market doesn't crash at all and prices keep going up for another 3 or 4 years?

And then you throw in the towel, buy a home at a higher price... and voila! That is when the market crashes.

Don't buy a house to make a profit. Buy a home because you want a nice place to live. Buying a home is supposed to be a long term commitment. If you're lucky and love the place it may be the last home you ever buy.

12. Avoid Emotional Attachment

You may love your home and think its totally awesome, but your emotional attachment may be clouding your judgement. (Attachment leads to the Dark Side of Real Estate... :p )

Being emotionally attached to your home means your objectivity is compromised. Your home will be more difficult to sell because it will be overpriced and the offers people give you will be significantly less.

David Hilder of Oakville tried to that with his 2,250 square foot townhouse, but after 5 months and very few offers he decided to get a real estate agent instead in September. He listed his home on a “for sale by owner“ website (for speedy typing I will refer to these as FSBO sites), but there web traffic on such websites is pathetically low.

“The problem is, without the Multiple Listing Service you’re dead in the water,” says Hilder. “That’s the first place most people look.”

So #1 in the list of problems that FSBO sites have is very low traffic.

#2. Is actually making the sale. Owners typically have no salesmanship skills, which is why real estate agents are so much better. Retaining them once they get in the door is very difficult for people with no sales experience.

The MLS accounts for 90% of sales in Canada. Limiting yourself to a For Sale sign out front and free websites (or very cheap websites) puts you at the bottom of the barrel for trying to actually sell to a buyer.

In such a scenario your best option is the safety with numbers approach. You can still try to sell your home privately, but why not have the option of a real estate agent at the same time?

For sale by owner networks in Canada have only started to realize this and are now trying to become more competitive. ByTheOwner.com, one of Ontario’s largest for sale by owner sites, is joining forces with 4 other commission-free FSBO sites to create the first national network and a commission free database.

The five companies includeBytheowner.com in OntarioPrivateRealEstate.ca in OntarioDuproprio.com in QuebecComFree.ca in Alberta and ManitobaSkhomes4sale.com in Saskatchewan

HOWEVER THEY ARE NOT FREE! Getting listed on these networks still cost $500 to $700 and there is no guarantee you will sell your home that way.

Also the network is still very small and local. There is no increase in traffic because the websites are simply sharing database resources.

Plus there is a huge disadvantage when it comes to attracting sellers and buyers.

#1. Only a confident (or very cheap) person would try to sell their home privately. What does that say about their personality and the quality of their home? It implies that their home is similarly cheap and likely has structural problems with it that will be glossed over or lied about.

#2. There is no advantage to buyers to buy a home through a private listing. The risks of problems with the house, lawsuits, etc is too high. The real estate commission is a comparatively minor cost when it comes with a better guarantee that the home it will be problem free.

Right now the real estate market in Canada has slowed to a crawl. This act seems more like one of desperation in the hopes of getting free press and surviving the coming real estate bubble burst.

Right now the federal Competition Bureau is taking the Canadian Real Estate Association, which controls the MLS to court, so that people will have greater and cheaper access to the online registry of homes... but do not expect a breakthrough.

The hearing won’t be until next April and difference in price between listing yourself and listing on MLS with an agent will probably be very little.

Plus the existence of FSBO sites that don’t use the MLS shows that there is no monopoly (10% of Canadians still manage to sell privately). And FSBO sites do have the option of listing on MLS, but they have to pay the fees just like regular real estate agents do.

“Nothing tangible in this world is free, least of all real estate.”

In other news...

Real estate in Detroit is so cheap you can buy a derelict house for $100 (due to foreclosures)... for a good house expect to pay $25,000. Mind you, Detroit is quickly becoming a Ghost City so unless you are planning to retire there do not expect to find a job there.

Thursday, September 23, 2010

$68,007 USD for a large four bedroom house... there's only one problem: Its in Detroit, the cheapest place in the USA to buy a home.

Looking to get more bang for your buck? Imagine living in a city where the local economy has collapsed and housing prices have dropped so much its ridiculous.

In Windsor, also hit hard by the economy, you can get a huge four-bedroom, two-bathroom home for an average of $158,242 according to a report by Coldwell Banker Canada. Its the cheapest place in Canada to buy a home.

What you don't want to do is buy a home in Vancouver... where a four bedroom home costs an average of $1,324,000. (Vancouver is definitely in a real estate bubble.)

In Kelowna B.C. a four-bedroom home costs an average of $916,697.

In Fort McMurray, Alta. a four bedroom home costs $593,390.

In the GTA a four-bedroom home costs an average of $495,398. (The GTA includes Toronto, East York, Scarborough, Etobicoke and North York.)

Toronto costs less because it has more alternatives like condos, lofts and townhomes.

Relocation for work isn’t the biggest factor in most people’s decision to move however. A study by TD Canada Trust released Wednesday says retirement (30%) is the number one choice for people to sell their home and move.

Other reasons include market conditions (16%) investment opportunities (16%) and children moving out (15%).

Meanwhile Newport Beach, California, is the most expensive place to buy a four bedroom home in North America: $1,826,348 USD.

Globally, Shanghai is most expensive at $1,494,072 USD and Dubai is 2nd at $1,413,750 USD.

Saturday, September 18, 2010

You expect everything to be built properly, that it isn't going to fall apart or suddenly become a dangerous death trap.

Recently a pane of glass shattered and rained to the ground from the 31st floor of the Murano building at 37 Grosvenor St. in downtown Toronto. It was the second time in the past week that glass panels from the building had broken and nearly hit people below.

The falling glass did not cause any injuries from falling approx. 100 meters. The condo tower had been inspired by the legendary Murano glassworks of Italy.

The owner of the condo in question didn't even know the glass had suddenly shattered. They simply noticed the breeze and was confused by how the glass had disappeared.

Some of the glass hit the balconies of residents below. If someone had been outside enjoying the weather they could have been hit with little warning.

“I looked out my window and there were little pieces of glass all over my balcony,” said one resident who described the noise as sounding like crashing marble. “I was kind of annoyed.”

“It’s not safe. Somebody could be down (there) and a big piece of glass could fall on them.”

On ground level a lawn-care worker with Lawn 911 vacuumed chunks of glass from the grounds near the corner of Grosvenor St. and Bay St. The panel had been approx. 1.2 metres tall and a metre wide.

They believe the wind rattled the window and shattered it. The fact this has happened twice in the past week suggests the windows were either cheaply made or weren't installed properly.

The property manager says engineers are working to see how and why the two panes shattered. The manager is planning to test every panel (which is wise because the last thing they need is a lawsuit from someone being injured).

The panels were made of tempered glass, which is usually stronger than regular glass and is supposed to shatter into small fragments instead of shards when broken. This one appears to have shattered into shards suggesting it wasn't tempered properly.

But at the same time it should be noted that regular houses (faulty construction or renovations) could be just as dangerous, or even more dangerous because many houses are not subject to regular maintenance, repairs or safety checks.

Wednesday, September 15, 2010

Rosedale is an idyllic neighbourhood smack dab in the middle of Toronto. I live right near it so I like to go cycling and for walks there, and who wouldn't when you see the rows of old trees and the often unique architecture of the homes (both old and new) in Rosedale.

Rosedale was once considered a suburb 100 years ago, but is now really more uptown or midtown Toronto as the city has spread and is now a megacity metropolis. It is now the 2nd wealthiest neighbourhood in Toronto (Forest Hill, where Conrad Black lives when he is not in prison is #1).

Bordering on the CPR railway tracks, Yonge Street and Bloor Street, and Bayview Avenue Rosedale is conveniently near no less than 5 subway stations and also the Don Valley Parkway. A ravine running east and west divides Rosedale into sections, the south end and the north end.

I admit I get lost in Rosedale almost every time I go there. The streets are rather confusing to an outsider (a bit like visiting Kitchener-Waterloo where my cousins live). Still the mystery and feeling of exploration never leaves me because I always feel like I am discovering a new part of the city I never knew about.

Historically South Rosedale was first settled by Sheriff William Jarvis (whom Jarvis Street is named after) and his wife, Mary, in 1820. Mary Jarvis' walks and horseback rides blazed the trails which would later become Rosedale's streets and forested paths that are still used today. It was Mary who gave Rosedale its name, after the wild roses that used to grow there. (Many Rosedale residents still have roses, but they're usually of the tamer variety.)

The Jarvis Family sold their Rosedale property in 1864 and it became a residential development.

(Note: You may have noticed a lot of the buildings or trees in Rosedale have ivy growing on them. I LOVE IVY. I'd pay extra just to own a house covered in ivy. Or Wisteria. I love Wisteria too. I recommend that people trying to planning to sell their home eventually to plant ivy and Wisteria around the sides of the building. It looks beautiful and it should help jack up the price.)

North Rosedale was home to St. Andrew's College (1899-1924), an all-boys boarding school. The place was also known for the Rosedale Golf Club, a lacrosse field (Rosedale Field) and was the site of the first Grey Cup Canadian football game. When a bridge (Glen Road Bridge) was built across the ravine (now known as Park Drive Ravine) in 1909 it led to residential development both in Rosedale and other neighbourhoods north of the ravine.

Technically there is three ravines that run through Rosedale. Building on the edge of a ravine is risky so its served to create natural parkland all around Rosedale, creating physical boundaries to the neighbourhood. These ravines and the wonderful old buildings / architecture is why I think its such a nice neighbourhood to cycle in and live in.

Plus there's almost ZERO traffic. For a cyclist or even someone just walking this is important because it means you can wander the neighbourhood with little worry of being struck by a car (less worry if you have children who run amok too).

Most of the homes in Rosedale are single detached.

For the family minded Rosedale also has a specialty arts school, an exclusive all-girls school, Branksome Hall and Rosedale Elementary Public School and there is the community centre Mooredale House, which is also home to the Mooredale Orchestra.

Rosedale Park hosts a Mayfair annual party usually on the first Saturday in May, which includes rides, games, flea market and carnival-like activities. The event is run and funded by Mooredale House.

According to Statistics Canada (2006) the average income of Rosedale Residents is $213,941.

So yeah... if you go shopping for a home in Rosedale expect to pay over $1 million for it. I doubt I will ever be able to afford a home in such a beautiful part of Toronto, but that doesn't stop me from dreaming right?

According to the Organization for Economic Co-operation and Development (OECD) Canadian housing looks “overpriced” and they believe the Canadian government should take measures to deliberately slow the mortgage market. The Paris based think tank monitors the economics of 33 wealthy member nations, including Canada.

“Canadian house prices, or at least some regional or local housing markets, notably those of Toronto and Vancouver may still reflect excess demand conditions,” says the OECD's annual review of the Canadian economy. “Housing looks overpriced on the basis of both price-to-rent and price-to-income measures.”

The average Canadian in 2010 makes LESS than what they made in 2007 and our disposable income is dwindling. Meanwhile household debt in Canada has skyrocketed 250% from 1989 levels to $42,000 in debt (from $16,800 in 1989). Simultaneously housing prices in Canada have continued to soar, so that the average price of a home in Canada is now approx. $330,000, but the average Canadian only makes $38,000 / year.

Affordable homes, according to economists should be in the range of 3 to 5 times the cost of annual income, after taxes. In Canada its 9 times that of income which means Canadian homes are overpriced.

According to the OECD the cost of Canadian homes is now 35% higher than long term averages.

The OECD also predicts about 7.5% of Canadians are so in debt they could find themselves financially vulnerable by 2012 if interest rates rise while borrowing stays at the current pace. “High household indebtedness also implies a growing vulnerability to any future adverse shocks,” says the OECD. “Household credit growth needs to slow down.”

The Canadian government currently provides financial guarantees for default insurance on risky mortgages, but this is basically just endorsing/ensuring risky mortgages instead of trying to slow them down. The OECD has noticed this.

“Rules to qualify for government backed insurance have been tightened, but more measures should be taken if needed to cool down the market.”

The OECD report suggests the government should require larger down payments on all federally insured mortgages. They also suggest the government force banks to disclose how “sensitive” their mortgage revenues are to rate hikes so that homebuyers aren't getting caught in the middle later on.

“Lending standards and the framework for mortgage insurance are the right tools to contain this cycle,” says the OECD.

The OECD notes that subprime mortgages make up 5% of mortgages in Canada. In 2007 before the recession hit the % of subprime mortgages in the USA was 33%.

As such when home prices in Canada drop or collapse, it should be in the range of 15 to 18% instead of the 45% range it was in the USA. The drop was the biggest in large cities like L.A., Miami and New York. Canada should expect the largest drops in Vancouver, Toronto and Montreal.

Furthermore the big drops were usually in the suburbs or parts of the cities which were more financially woeful. Housing prices stay relatively stable in older / more wealthy communities.

Sunday, September 12, 2010

Stephen Jarislowsky has been warning people for years that the Canadian housing market is in a bubble and he is "convinced" its going to burst eventually. Jarislowsky is chairman of Montreal-based investment adviser firm Jarislowsky Fraser Ltd. He says the housing bubble is fueled by Canadian government measures that encouraged consumers to take on debt and mortgages they can't afford.

So for example if someone buys a home in a Toronto suburb for $600,000, but can't afford it they eventually renege on their mortgage its the government which takes the hit because they've basically written banks a blank cheque by insuring mortgages. If a thousand such mortgages go bust, the bank then has to sell the homes at a reduced price during a bad real estate year (ie. they sell the homes for an average of $500,000) and the government ends up with $100,000 times 1,000 in losses = $100 million. And that is just for a thousand houses if the bubble bursts and people renege on mortgages... what if 50,000 people lose their homes? Or 100,000? And what if prices slide a lot more than 15%? In the worst case scenario, lets say 100,000 people lose their homes and the average value lost is $200,000... that is $20 billion that the banks/government are on the hook for.

When the bubble burst in the USA over a million Americans lost their homes in 2008.

“They have basically encouraged people to buy houses based on cheap mortgages,” says 84-year-old Jarislowsky. “That has created the opposite effect of what was desirable.”

While Canadian home prices and resales grew during the Spring this year, the sudden drop in sales during the Summer shows Jarislowsky is probably right about the bubble bursting. The big Canadian banks are also in panic mode and they know there is an economic roller coaster coming. Even Canadian Prime Minister Stephen Harper is running for cover, trying to blame other people for his economic failings.

“I am convinced there is a housing bubble in Canada,” said Mr. Jarislowsky in February. His investment fund owns shares in Canada’s four biggest banks and they stand to lose tens of millions when the bubble bursts.

Jarislowsky is one of Canada’s wealthiest investors with a personal fortune worth $1.85-billion according to Canadian Business magazine.

Meanwhile Canadian Finance Minister Jim Flaherty claims there is “no clear evidence” of a housing bubble in Canada, according to Flaherty's spokesman Chisholm Pothier.

Jarislowsky says the government should have put more stimulus money into boosting infrastructure, not household spending. Stephen Harper's temporary tax credit for home renovations was limited to first-time home buyers and encouraged cheap mortgages from banks, but this only inflates the housing bubble even more by making too much available credit for home buyers. Worse that tax credit has already run out and the bubble bursting could potentially rob anyone who bought a home in the last 8 months and can't afford it

“I conclude that the prices of housing today in the U.S. are cheaper than they should be, and that the prices in Canada are far more expensive than they should be,” says Jarislowsky. “Excess spending by the consumer and going further into debt was the worst thing that they could do, and that is what has happened in Canada.”

Thursday, September 9, 2010

The Bank of Canada has raised interest rates again, the third time in 2010, up another 25 basis points from 0.75% and bringing the total to 1%.

People with variable mortgage rates or lines of credit will notice the effect immediately...

However the good news is that banks are becoming more competitive with their mortgage rates... the slumping Canadian real estate market is dragging its knuckles and looking like its going to get punched out for the count... and as a result the Canadian banks are becoming super competitive about trying to get your mortgage.

However I am worried the Bank of Canada increase of mortgage rates will just scare homebuyers even more, worsening the bursting real estate bubble that has started.

When you consider that Canada might fall into a double dip recession the Bank of Canada seems to be playing it fast and loose... and taking far too many risks in their efforts to curb spending and household debt.

Friday, September 3, 2010

Sales of existing Toronto homes fell 23% in August compared to 2009. New figures released today show sales dropped to 6,222 (compared to 8,035 in 2009). This is the fourth month for a drop in sales.

The average price is still up 6% compared to last year, despite the lack of bidding wars. Realtors were hoping for a 10% increase but that didn't happen since the Toronto real estate market is shifting to a buyers market. On average prices this year are still up 8%.

“The prospect of interest rate hikes and new mortgage lending rules prompted some households to purchase a home sooner than they otherwise would have this year,” says TREB president Bill Johnston. “The result has been a larger than normal dip over the summer months.”

Analysts keep repeatedly that prices are due for a fall in 2011. It is now taking longer to sell a home, 36 days on average compared with 30 last year, up by 20%. Listings are also up by 20% as the market becomes more flooded.

Monday, August 23, 2010

It was the scandal everyone was talking about in 2009, the collapse of plans by the Bazis to build a huge skyscraper condo/hotel on the site of One Bloor East. Bazis International is an architectural company from Kazakhstan with strong ties to Toronto in Canada. The company normally builds residential communities, office towers, government buildings, hotels, apartments, theatres, shopping malls, and industrial complexes.

Thus when they announced in 2007 that they were tearing down the old Harvey's and adjoining buildings to build a huge 81-storey condo / hotel, they seemed like the perfect company for the job.

It was to be the most expensive and prestigious condo in Toronto. Rich people were lining up down the street for days just to get a chance to bid on the properties. Fist fights were breaking out and arguments as tempers and patiences became frayed. When they were finally allowed in to bid on some of the condos available the company announced they had doubled all the prices. Even so the condos sold like hot cakes and they were sold out in a matter of days.

The finished building was to have 189 hotel rooms and 612 condominium units. The glass and metal structure would have used the latest environmentally friendly and efficient technology making it one of the greenest condos in Toronto.

But all was not well within Bazis International. They had taken out loans to buy the land in the first place and to deal with construction estimates they decided to shorten the building to 67 floors. The Bazis had purchased the land for $63 million in 2007, but they ended up defaulting on a $46 million loan from investors.

By 2008 the global lending crisis was hitting hard in the USA and investors wanted their money back. They were forced to sell the property and give back the deposits from condo buyers. Bazis sold the property in July 2009 to Great Gulf Homes and the land currently sits empty.

Local high school teacher Stephen Young and a number of friends have since started a Facebook group and a petition promoting the idea that the vacant land be used for a public park... or more precisely "Bloor Yonge Square". But its doubtful the city will come up with $60+ million to buy the land and turn it into a public space.

Great Gulf Homes plans to build a 65-storey condo, using the name "Number One Bloor", and will be designed by Hariri Pontinari Architects. The first 6 floors will include retail space, a mall, a movie theatre multiplex, a cafeteria, restaurants and an outdoor terrace open to the public. The condo will have 687 units. See the architectural renderings below.

Of course such a condo is beyond the means of mere mortals like myself, but one can dream can't they?

Wednesday, August 18, 2010

Some homeowners are turning to extreme measures to kill off their bed bug problem. One solution (and often an expensive one) is to kill the bed bugs using heat, by essentially turning your home into a large convection oven.

There's two ways to do this:

#1. Hire a professional like 'ThermaPureHeat' or 'Magical Pest Control' to kill your bed bugs by pumping hot air into your home, at a cost of roughly $1 per square foot this is an expensive method. They pump hot air into your home for several hour, raising the temperature inside to 50 degrees C.

At 43 degrees C the bed bugs start coming out of the woodwork looking for a place that is cooler. Within 20 minutes of living in 46 degree C temperatures all the adults are dead, due to the heat and water loss. It takes another 30 minutes before the eggs are dead too. At 50 degrees for several hours all the bed bugs and their eggs are dead and to guarantee none managed to hide in a crack in the wall the company has fans to blow hot air into every nook and cranny. The extra time spent is to make sure every section of the home is permeated with the heat so that nothing survives. (Its recommended you remove anything that is vulnerable to the heat, like CDs, DVDs, etc.) All organisms have a thermal death point and for bed bugs its approx. 46 degrees C (115 Fahrenheit).

#2. Do It Yourself. You will need an industrial heater, fans and you will want to raise the temperature to 60 degrees C to be extra certain they're all dead. You will also want a thermometer gun and a fire extinguisher to make certain all the places in the home are heated to at least 46 C. The fire extinguisher is in case you have anything combustible that you forgot about.

However this technique of heating your home doesn't work that well on condos or apartments. The bed bugs tend to get into the neighbouring apartments and they're much harder to get rid of.

REMEMBER TO TURN OFF THE FIRE ALARMS! The last thing you need is a false alarm visit from the fire dept. from the heat setting off the fire alarm.

According to ThermaPureHeat they've only had 1 fire in almost 100,000 jobs and that was because of a lit cigarette near the propane, and nothing to do with the hot air being pumped into the building.

I know a third solution. You invite Stephen Harper over and he kills all your bed bugs with a load of hot air.

Monday, August 16, 2010

Toronto's real estate market is overdue for a “moderate correction” according to the TD Bank which is predicting home prices should slip 10 to 15%.

“The excessive pricing of Canadian housing in relation to fundamentals is now clearly correcting,” says TD Bank economist Grant Bishop. “We expect a moderate correction in prices over the coming year.”

The TD bank is predicting a “downward correction of 10 per cent in monthly average prices, followed by several years of stagnation of price growth,” especially since many Canadian families have large debts which is hampering their ability to borrow more.

Other Canadian economists also believe the Canadian real estate market is overvalued, with estimates varying between 25% and 40%. The Canadian Real Estate Association (CREA) downgraded their estimates in August as sharp declines in home sales made it clear it was becoming a bear market (a bear market means buyers are hibernating and waiting it out).

Seasonally adjusted national home sales were down 6.8% in July compared with June. On a year-over-year basis, Canada's sales activity was down by 30% compared with July 2009. Home sales have declined for three months in a row.

“The market went up faster than most people have expected and it’s going down more quickly than we had anticipated,” says Sal Guatieri, a BMO Capital Markets senior economist.

The average price of homes sold in July was $330,351, only 1% higher than a year earlier. If more potential buyers hold back prices might begin to dip, sparking a price drop as the market recorrects itself.

“The combination of tighter mortgage insurance rules, a modest back up in borrowing costs, and the HST have delivered a hammer blow to sales,” says Doug Porter, deputy chief economist for BMO Capital Markets.

CREA is warning there will be more dismal sales numbers in the future.

Tuesday, August 10, 2010

Canada Mortgage and Housing Corp. reports there has been a 1.6% decline in the annual rate for housing starts in July, a drop of 3,100. Most notable was huge drops in single urban starts which is down 11.3%, with the biggest drop in British Columbia with a 14.8% drop.

Rural starts were also down.

Atlantic Canada however is seeing a boom, up 37.7% in a region which typically has less demand for new homes.

Monday, August 9, 2010

If you think your electricity bill is high now, wait a couple years. Electricity rates are set to skyrocket between now and 2015 for multiple reasons.

#1. Ontario Hydro's Debt

Ontario residents are being forced to pay off decades of debt incurred by the old Ontario Hydro during the 1980s and 1990s. Most of the debt is from building big expensive nuclear plants that went waaaaaaay over budget. And I am not talking like 10% over budget, I am talking like 400 to 800% over budget. The extra cost was incurred during the building process because the nuclear plants were built in remote locations, which made it more difficult to get supply trucks to carrying everything from wet cement, steel girders, etc. A lot of the time construction crews stood around waiting for the trucks to arrive, getting paid while waiting for materials to arrive (the same thing occurs when building / repairing a road, which is why you so often see crews just standing around waiting).

#2. Electricity isn't Cheap

Regardless of how electricity is made, it isn't cheap. There's always a huge financial cost. For decades now the province of Ontario has been subsidizing the cost of electricity by 50% or more. The 6.5 cents per kWh you pay is only half of the 13 cents it costs Ontario Hydro to make it.

#3. Exporting Excess Electricity No More

It used to be Ontario had extra electricity to go around so Ontario Hydro would sell it to Quebec, Manitoba and even across the border to the United States. Selling it would make up part of the price, but now we have a shortage of electricity and exporting it is no longer wise or profitable.

#4. New $4 billion Power Lines

The Ontario Power Authority estimates Ontario needs to spend $4 billion on new high-voltage transmission lines over the next 10-15 years. This will add more to the cost of electricity in Ontario.

#5. Coal-Burning Plants being Shut Down

Ontario is set to phase out coal-burning plants over the next couple of years as more wind and solar projects come online. Coal isn't cheap, but it is cheaper than other options available. Shutting down coal plants however will single-handedly cut Ontario's CO2 production by 35% once they've all been phased out.

#6. Fixing Old Nuclear Plants

Old and aging nuclear plants need to be shut down periodically, cleaned, repaired and retrofitted. This is a very expensive process, but its a necessity to keep them running perfectly and within safety limits.

#7. Toronto Expected to Pay Extra

There is a plan in the works to scrap building a big major power line into Toronto. This extra power line would allow extra power to be brought into Toronto and would keep electricity rates in Toronto stable by increasing the amount available. With that power line being scrapped Torontonians will have a shortage of electricity and will be either facing brownouts or see their electricity rates go up (and the people who can't afford the higher rates will have to find ways to cut back on their usage).

Now why am I so worried about all this...?

Truth be told I don't think I use that much electricity. True, I do leave the AC on all the time, but beyond that I just have my computer, a TV, a fridge, a freezer, a microwave and a few small appliances like my alarm clock. If I was forced to be frugal I don't think the TV or microwave need to be plugged in all the time, and the AC could certainly be turned off more often or even permanently.

Thus in my mind, switching to a solar panel/wind turbine with a battery backup system is not only practical, but cheaper. I know enough about the topic that I could do it on a budget (as per someone equipping a cottage up north) rather than the big expensive $30,000 ones that some people install... because they want their solar panels to be top-of-the-line and have excess power to be fed back into the grid...

Myself, I'd rather cut myself off from the grid. Your property taxes are much lower when you are off the grid and its worth it in my mind to be completely independent. The cost of buying all the necessary equipment and battery storage is offset at a faster rate because you're no longer paying taxes just for being attached to the grid.

Tuesday, August 3, 2010

While I write this I am listening to "Eye of the Tiger" by the band Survivor... more commonly known as the song during Rocky Balboa's infamous montage videos...

Oddly enough I find it metaphorical for Toronto's slumping condominium market which seems to be gearing down as sales start to slow.

New condo sales have slumped 8% to 4,991 sales in the second quarter of 2010, compared with 5,415 in the first quarter. This is the first time since 1994 that 2nd quarter sales have slumped compared to the first.

“We were expecting sales to be stronger in the second quarter, but it looks like the market is softening,” says Ben Myers, the VP of condo market research firm Urbanation Inc. Urbanation expects new condo sales to continue to slump for the rest of 2010.

Compared to 2009 sales are down dramatically. (Although it should be noted 2009 was a record year for the 1st and 4th quarters with respect to condo sales.)

However there is another problem... the market is becoming flooded with condos. Another 12,000 condo completions are expected by the end of 2010. There will be roughly an extra 2,000 condos that will go unsold.

“That’s an absolutely huge number and a lot of product coming on to the market all at once,” says Myers.

Furthermore the condos that are being purchased are mostly by investors and speculators who are hoping to flip them for a profit once the condo is finished, which means the market of new condos will be even more flooded.

Toronto has 272 condo projects currently active, all looking for buyers in Toronto's real estate market. Except these buyers are being cautious and looking for deals. Another 20 new condo projects are expected during the 3rd quarter, which will flood the market even more.

The problem however is that with so many condo projects and not enough buyers many projects end up with delayed completions because the money isn't flowing in fast enough.

Anybody investing in a new condo now should expect deflation of the value, not flipping it for more. The average price for a new condo in Toronto is $529 per square foot. A few years ago it was $639 per square foot, which shows prices are coming down dramatically.

In contrast its much cheaper to buy an older condo in Toronto. A mere $369 per square foot. The resale market is very strong right now, with the 2nd quarter of 2010 posting record sales of 5,076.

My advice for people buying condos? Keep your chin up and keep trying to find a deal. With the market slumping now is a good time to buy a condo for less. Keep looking until you find a deal which is perfect.

"Let me tell you something you already know. The world ain't all sunshine and rainbows. It is a very mean and nasty place and it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't how hard you hit; it's about how hard you can get hit, and keep moving forward. How much you can take, and keep moving forward. That's how winning is done. Now, if you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hit, and not pointing fingers saying you ain't where you are because of him, or her, or anybody. Cowards do that and that ain't you. You're better than that!" - Rocky Balboa.

Sunday, August 1, 2010

In May Dawson Pereira launched a brokerage service touting “one cent” listings on the Multiple Listing Service. A former ReMax agent he was charging $600 to list property in the database, but if the home was sold within 10 days he refunded $599.99.

Excited people looking to save on the costs of listing in the MLS database started pouring in and his business was booming.

But on July 23rd the Toronto Real Estate Board and the Canadian Real Estate Association shut him down, saying he was in violation of regulations.

“I didn’t realize I was breaking any rules. I was just offering people an alternative, but they gave me a major hard time,” says Pereira. He was just one of many discount companies because CREA was accused of restricting competition by the federal Competition Bureau.

Except shutting him down implies they're just doing more of the same: Restricting competition. Their regulations appear to have been designed to prevent competition.

One of the regulations he violated was listing clients' contact info on the MLS website, allowing buyers to contact sellers directly without going through an agent... this is a big no-no according to CREA who makes their money off agent fees.

“They basically want everyone to contact an agent first so they can make their commission, but that doesn’t save the consumer anything,” said Pereira, who has been forced to terminate all listings and give refunds to existing customers.

The Competition Bureau this year managed to CREA to change some of its rules, but one of the rules CREA refused to change was regarding the seller's contact info appearing on the MLS websites.

That one regulation is now the subject of a court case between the Competition Commissioner Melanie Aitken and CREA.

“CREA’s rules were amended to clarify that a seller’s contact information can be included in the Realtor only (private) remarks section of a listing,” says CREA lawyer Catherine McKenna. “This means that a Realtor may direct buyers’ agents to contact the seller directly for appointments if the seller instructs the Realtor to this effect in writing.”

That means the seller’s name is still allowed on the MLS, but in a section accessible only to agents. (Which means CREA still gets a commission.)

This doesn't help sellers at all, says Georgetown resident David Fraser. He signed up with Pereira. Fraser says he could have saved $15,000+ in commissions on his home which was listed for $337,000. “The MLS has a lot more reach, but it doesn’t do you any good if no one can contact you directly,” says Fraser.

Pereira is also in trouble with CREA for using their MLS and REALTOR trademarks incorrectly. His websites 1centMLSlisting.com and savetherealtorfees.com contained the words MLS and Realtor, but did not include their logos. Apparently they're also upset because the word "Realtor" appears in lower case in his domain name.

Pereira thinks the so-called changes in the real estate business may be an illusion. I agree, they made a few minor changes to keep the Competition Bureau happy, but they're still restricting the competition.

Its a bit like slowing down 10 kmph while speeding, but you're still doing 110 kmph anyway.

If sellers can save money by avoiding realtor fees and selling privately I say more power to them. There is no law saying they have to go through a realtor. Only CREA regulations require that and those regulations stifle competition in what is essentially a monopoly for Canadian home listings.

Tuesday, July 27, 2010

According to the Toronto Real Estate Board (TREB) / Greater Toronto Realtors only 2,790 sales were made during the first two weeks of July 2010. For the Toronto real estate market that represents a 37% drop compared to the same time frame in July 2009. New listings also were down 8%.

This is to be a little expected however. Last year saw a bumper crop of home sales.

“Last summer existing home sales spiked well above the expected long-term trend. Sales were also unseasonably high during the first four months of this year,” says TREB President Bill Johnston. “Transactions will be down year over - year in the second half of 2010 as the level of sales balances out.”

“With year-to-date sales up by more than 18 per cent compared to last year, we continue to look forward to one of the best years on record under the current TREB trading area,” says Bill.

The average price for July mid-month transactions was $427,931 – up 8% from the same time period in 2009.

Jason Mercer, TREB’s Senior Manager of Market Analysis, believes that there will plenty of sales to maintain the sustainability of price growth.

Thursday, July 22, 2010

New homeowners in Etobicoke are being struck by multiple retroactive property tax bills for 2008, 2009 and 2010... and they have to be paid in two installments in September and October.

Depending on the size of a home in Etobicoke homeowners can expect the combined three tax bills to total between $2,100 for a small bungalow and $60,000 for a multi-million-dollar mansion.

Having to find such large amounts in a short time period has angered many homeowners, especially since this isn't the fault of the homeowners in the first place. This is the fault of lazy, slow-moving bureaucracy.

Property taxes in Ontario are assessed by MPAC (Municipal Property Assessment Corporation) and are usually assessed in the current year and going back up to two years. Thus the longest any property tax can be retroactive is three years. When that happens, homeowners get an extra hefty bill to pay in a short amount of time. But it is supposed to be extremely rare!

Normally assessment is supposed to happen within the first 6 months of new construction.

What has happened here is because of a shortage of inspectors and rampant growth of new homes in the Etobicoke region there has become a huge backlog of new homes that don't get assessed for 2 or 3 years after being built. (Or rebuilt in the case of fire or there was something wrong with the foundation forcing the house to be torn down and rebuilt.)

This year however instead of 1 or 2 homes being charged retroactive tax bills going back three years, there are literally hundreds of new homeowners who are getting whacked over the head by the tax truncheon. MPAC is refusing to give exact numbers, but the number of complaints continue to pile up.

Worse, if your house was rebuilt and it was originally valued at say $450,000 in 2007 and the new house is only worth $250,000 you still have to pay retroactive taxes on the house as if it was still worth $450,000.

More than 12,300 supplementary tax bills were mailed in the last cycle of land taxes in Etobicoke, mostly representing back land taxes for 2 years. There are 3 to 4 cycles of land taxes per year.

So yeah. That has just scared me away from buying a home in Etobicoke. If they can't send tax bills out on time, just imagine what else is wrong with the system out there.

Tuesday, July 20, 2010

The Bank of Canada has raised interest rates again, making it more difficult for people to get a mortgage at an affordable rate. The key overnight lending rate has been raised from 0.5% to 0.75%.

With that in mind it makes sense to me that people might want to consider buying a house in a region of Toronto which is often overlooked.

Leaside is a small but quiet neighbourhood right in the middle of Toronto. Most of the homes in Leaside are traditional detached two-storey designs dating from the 1930s and 1940s, all-brick constructed, with distinctive intermixing of cut stone around entryways and front bay windows. Homes in Leaside often have exterior details such as leaded glass windows, arched / peaked entrances and broad wooden door casings. Its a level of artistry that hasn't been seen in decades and for someone like myself who enjoys older architecture, a pleasure. Inside you will typically see traditional wooden mouldings, baseboards, and floors... the type of things you'd see when visiting your grandparents.

Or in my case, my parents' farm... or the 1920s apartment building I currently live in.

I look at the architecture of some of the homes in Leaside and I just drool. They're "perfect", almost idealized, like a Carl Schaefer painting.

Not all the homes in Leaside are what I'd call affordable. Some of the really nice homes are $900,000 or more. Depending on where you look however there are more economical alternatives. South Leaside has a variety of semis and bungalows with price ranges hovering around $500,000.

The reason for this is because Leaside is a good place for anyone in the upper middle-class wage bracket. So that means people like myself probably couldn't afford to live there... but I can still dream right?

Sure, its not the multi-million dollar homes of Rosedale... and its not one of the soon-to-be-a-slum condos by the waterfront either. Its just a nice quiet neighbourhood with the following perks:

#1. Conveniently close to both Yonge Street and the Don Valley Parkway. Commute time to downtown is 15-30 minutes.

#2. Cycling distance from downtown. In fact there's plenty of bicycle lanes and trails in the surrounding region. (As a bicycle mechanic, I appreciate these things.)

#5. Oh and its only a short bicycle ride to the Ontario Science Centre, a huge chunk of parkland, fishing in the Don River and the archery range just south of the OSC (as someone who enjoys the sport of archery I can appreciate that).

The area is named after the Lea family from Lancashire, England who arrived in Canada in 1819. John and Mary Lea later built the first brick house in York township in 1829. In 1841 their son William later bought additional land and built an octagonal home which he dubbed "Leaside". The house is no longer there, but its location was where the Leaside Memorial Gardens is now.

I did manage to find a painting of the octagonal home however, shown here.

A lot has changed since Leaside was once prime farmland. Now there's three subway stations nearby, Eglinton, Davisville and Bayview, a plethora of restaurants, boutiques and a combination of small "family businesses" and larger retail stores.

The history of the area includes:

The Leaside Junction Station, one of the busiest train stations and train yards in Toronto from 1894 to 1969.

The Leaside Viaduct, a bridge built in 1927 across the Don Valley.

Residential construction in Leaside didn't begin until the 1930s. In 1967 Leaside became part of East York and eventualled was amalgamated with Toronto in 1997. The area is popular with families, since it has such quiet streets, very little crime and a large number of schools / parkland. Many parents consider it to be one of the ideal locations in Toronto to raise kids.

In the 1990s a number of "exclusive" condos and townhouses were built in the region, attracting more families to the area. Many of Leaside's local shops are geared towards children and mothers, although the area also boasts antique shops, specialty stores and pubs. There's also libraries, community centres, indoor ice arena and an indoor swimming pool, curling rink and an auditorium. The local Sunnybrook Park even has horseback riding stables.

Seriously, freaking horse stables! Who wouldn't want to live in Leaside???

Well, maybe if you were allergic to horses or you have Hippophobia (the fear of horses)... but otherwise, com'on! Leaside is like a dream neighbourhood most people can only fantasize about living in. Of course, if you have a good job and can afford to live there that is another matter entirely.

Friday, July 16, 2010

When it comes to buying a home the question of which neighbourhood is the best (or at least the best for you) is a question that is bound to come up.

For example, I happen to like the quaintness of Tiny Town (Craven Road, near Gerrard and Coxwell). There's also Marlborough Place Avenue, a thin street between Avenue Road and Yonge Street, just north-west of Rosedale Subway Station. So despite the small size of the homes in Tiny Town or on Marlborough, these little houses are arguably pretty good if you want to find a house on a budget and you're not fussy about lots of space.

If you live way out in the middle of nowhere (ie. Mississauga's Lorne Park) you might think being surrounded by lots of trees (and the occassional vacant lot) is a good thing. Lorne Park is like the new Oakville... really far away from downtown Toronto, but the houses and land there is cheaper... just so far as you don't mind commuting.

And frankly there's nothing I find MORE BORING than sitting in traffic for 2 hours per day, because that is what you get when you live in Oakville, Richmond Hill, Vaughan, Markham, Purpleville or even those crazy people who commute all the way from Aurora, Newmarket, Pickering, Barrie or Hamilton. Its not even NEAR Toronto any more when you live way out there. Its just insane people who are too cheap to buy a house which is closer to downtown Toronto...

Or worse, they're so obsessed with having a backyard and a front yard that they completely ignore the condo option. Don't even get me started on the anti-condo movement... (Although I will note that overseas in Asia, condos are considered to be better than a house. The anti-condo sentiments in North America are outdated and unrealistic.)

Anywho... my point is that there is still plenty of unused land close to downtown where people can buy a house (or even build a new one). People can get "more bang for their buck" simply by shopping around more and exploring different options... ie. Midtown, uptown, Little Italy, Cabbagetown, Lawrence Park, Leaside, Summerhill... you know... the sleepy neighbourhoods where the prices aren't sky high, and are still pretty reasonable when you consider their location.

Price appreciation in the suburbs and satellite cities of the GTA have been going up so fast that a house in Richmond Hill is now comparable to the price of a house in Leaside. The houses in Richmond Hill may be bigger, have extra rooms you will never use (seriously, I swear the people designing these houses are building extra living rooms in them just so they can jack up the price more)... and frankly who needs all the extra space?

As a devoted cyclist I like being able to cycle around downtown on a moment's notice. Driving for an hour to get something annoys the hell out of me. I want to be close to the things I want. I am willing to pay extra for the convenience... and when you consider that the prices of homes in these suburban boonies are going up quickly it makes you realize that its probably unsustainable.

Lets take Lorne Park for example (its an upscale neighbourhood near the beach in Mississauga), where the average price has gone up 30.2% in the first half of 2010 compared to 2009 prices (figures from ReMax). The average home there is now $880,373 compared to $676,289 in 2009.

So you're not saving any money by living in such an upscale suburban neighbourhood. All you're doing is giving yourself extra headaches from traveling farther, making your gasoline budget sky rocket and destroying any convenience you could have had by living in a neighbourhood closer to the downtown core.

The “near suburbs” have been driving up prices during the first six months of 2010 because buyers want homes within a half-hour drive of downtown. Except Lorne Park isn't even near the downtown... the commute time is still 40 to 50 minutes via the Gardiner Expressway.

But buyers in 2009 actually got a deal in 2009... because prices in Lorne Park dropped 18% in the wake of the financial crisis in the USA. Thus anyone who bought a home in Lorne Park managed to get it on sale and is probably now tempted to flip it for a good sale value.

According to ReMax 80% of GTA neighbourhoods had a decline in value in 2009. With the record low interest rates people actually looking to buy probably got a good deal.

But this year the prices are back up. The average sale price in June was up 8% compared to June 2009, but overall the number of sales of Toronto homes were down 23%... despite the fact that home listings is up 28%, suggesting the Toronto real estate market is becoming a bit flooded.

Usually when the market is flooded prices should come down, but this phenomenon is not limited to just Toronto. Canadian home sales across the country in June were down a seasonally adjusted 8.2% compared to May. The Canadian Real Estate Association reported 36,467 sales in June, down from 39,778 reported in May.

Actual (not seasonally adjusted) sales was also down by 19.7% in June compared with June 2010.

And yet despite the lower number of sales, the average price in Canada in June was $342,662, up 4.9% from June 2009.

Part of this is probably due to the rise in interest rates and Canada's shakey recovery from the American Recession. Job numbers in the service sectors are up, but manufacturing is still shedding jobs.

So which Toronto neighbourhood is best? I think it really depends on what you can afford, but vote is for any neighbourhood where you can walk to the movie theatre, the grocery store or go shopping... all within 20 minutes.

Because then its no longer the size of your house. The whole city is your oyster.

The following is a list of 5 ways to make your house or condo look more expensive than it really is, but only if you don't mind looking like a snobbish douchebag.

1) WORK WITH WHITE

Use a limited palette and lots of white. It will make your condo seem bigger than it really is. No clashing colours, no questionable accents, just completely spartan like you don't have anything resembling a personality that is HUMAN. Instead you mix textures... suede sofa, satin pillows, faux polar bear skin rug. The idea is to convince people you paid a fortune because you WANT people to think you're a rich snobbish douchebag.

2) GO SHINY

Anything stainless steel or high gloss ceramic white or black adds a sense of luxury to your condo. Do this enough and you will begin to feel like you live in an industrial warehouse instead of a home.

3) DON'T BUY A SHOWROOM SET

Avoid having all your furniture designs match. If all your decor looks like you bought it at Ikea on the same day your visitors will think you lack the skills to decorate. You're trying to show off like the rich douchebag you are so you have to the time to at least make it look like you put thought (or hired an interior decorator) into your layout.

4) SPEND A LOT ON ONE BIG ITEM

Spend all your wad on something really big and impressive. Max out your credit card by buying the most expensive 3D HDTV you can, with extra glasses for guests. Or if 3D HDTV isn't your thing, buy something equally expensive so you can show off to people.

5) BUY A PAINTING REPRODUCTION

You want to at least pretend you're sophisticated and know something about the artworld so go out and buy a really big reproduction of a famous painting, not something that is too distracting but is still pleasing to the eye. A really nice landscape, abstract painting or still-life... because you have no life and no time to go out and buy real painting from a real artist.

So obviously I am making fun of this. Interior designers these days are all loving the spartan white look and this look is being perpetuated by other interior designers on television and in magazines, etc. They have almost no imagination. Its a bit like the Nazis decorating... EVERYTHING MUST BE WHITE OR SPARTAN OR SHINY! *Best imitation of a German gestapo officer*

I say live a little. Want to impress people? Put real thought and personality into your decor. Use wood, mix palettes, experiment. Sure you can still buy big ticket items, but only if you really want them and not just because you're trying to impress people. BE YOURSELF. Don't try to present yourself as some bourgeosie spartan douchebag who must have everything looking perfect.